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<b>We just posted our Expanded Weekend Market Newsletter at http://www.technicalindicatorindex.com We continue to offer <span style=”color: #ff0000;”>our amazing 11 months for just $99 subscription deal </span>so you can follow what markets are telling us about the future of our economy. Simply go to http://www.technicalindicatorindex.com and <span style=”color: #ff0000;”>click on either the Subscribe Today or Renew Today </span>buttons. Here is an excerpt from Dr. McHugh’s latest Weekend Market Report, which you won’t want to miss:</b>
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<b>”On the fundamental economics front, the Housing market is struggling badly. We learned in the past few weeks that Existing Home Sales fell 5.1 percent in January, the fifth drop in the past six months, and came in at the lowest annual rate in almost two years. Further, New Home Construction fell 16 percent in January compared to December, the largest decline in three years. Further, New Housing Permits fell over 5 percent. Then we got the report that Homebuilder confidence fell 10 points to a 46 reading in February. Above 50 means an expanding market, below 50 means contracting. Further, mortgage applications fell 4.1 percent. This makes the point that there is a disconnect between the real economy (Main Street) and Wall Street. The stock market is not the real economy. The Fed’s QE programs are not helping mainstream America. They are helping Wall Street banking houses. We saw a Gallup poll last week that said the number one concern of Americans is unemployment. That flies in the face of the Labor Department’s parade of bogus declining unemployment statistics reported the past year. The economy is headed for a smash up. Infrastructure is in dire need of replacement. The Fed is printing money, but not for roads, bridges, communication lines, railroads, water lines, sewer lines. The Fed is printing money, but not for a massive economic stimulus income tax rebate to help households and small businesses. The Fed is printing money, but not for lower down payments on mortgages to stimula te housing. Nope.</b>
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<b>The Fed is printing money to buy securities from Wall Street which is taking the money and boosting stocks. However, the massive Jaws of Death stock market pattern shown on page 27 in this weekend’s report is telling us that of all the money that went into the stock market the past decade, well, most of it is going to be wiped out in a powerful and lengthy decline, meaning all the Fed’s horses and all the Fed’s men will not be able to bring the stock market back up together again, and trillions of freshly printed dollars will go up in smoke.</b>
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<b>When this happens, there will be no bridges to show for it, no new highways, no new railways, no new energy pipelines, no new water lines, nor sewer lines. No net new jobs, no net paybacks of household, small business, local and state debt. Only the memory of a five year stock market bounce will be left to show for the Fed’s past decade massive inflationary policy (where the prices of necessities, services and luxury products doubled and tripled). What a colossal waste.”MCH.</b>
An interview with Adam Woods, CNBC-quoted hedge fund manager.
Jim: Hello Adam and thanks for joining us. In summary, what’s the market doing currently and why?
Adam: As always, my pleasure. The market is acting great right now. In 2013, the S&P 500 vaulted a very impressive 30%. Then pulled back in January-early Feb to digest that move. At its lowest point, the S&P 500 only fell 6% from its record high which is completely normal and healthy during a strong uptrend. After that pullback, buyers showed up and sent prices right back to hold highs, and in some cases- to new highs. The action right now is very healthy in all three timeframes: Short, Intermediate, & Long.
Jim: And so The Fed is shouting loud and clear that they are steadily scaling back their efforts to support the market with printing money to buy bonds. Based on what you’ve seen in the numbers, is the market ready to stand on its own two feet now?
Adam: Eventually, yes. But not yet and that is why the Fed is still printing $65/b a month to help stimulate the economy. It is important to keep in mind that all the Fed stimulus takes time before Main Street reacts. Right now, we have seen Wall Street soar to new record highs and Main Street is following suit, just at a slightly slower growth rate. It is important to note that the US economy is the largest its ever been in history and is still growing, albeit at a slightly slower rate than people want. Most people do not talk about this fact and instead focus on the negative outliers. Overall both Main St & Wall Street are doing well. It just takes time for people to “feel” euphoric again. It takes time for the psychological wounds to heel from the vicious 2008 financial crisis. But in the process there is a lot of money to be made and those that pay attention are making it. In fact, for Midas Wave Alert Members. Every stock in their portfolio is up and every stock is up double digits. In fact, three of MWA’s stocks all gapped up after reporting earnings and are now up 38%, 29%, and 17%, respectively from when the alert was first published!
Jim: Any black swans out there that could affect what you see as on ongoing uptrend?
Adam: That is always possible but they have to emerge first and as we previously mentioned, significant market tops take time to develop so you can speculate all you want on the potential threats out there. But until the market starts to show signs of weakness, it deserves the bullish benefit of the doubt. A large concern is China. For years, China has been the primary growth engine of the global economy and is now beginning to show signs of weakness…or a slow down. That may become a major theme for 2014. Earlier today, Bloomberg reported: “China HSBC Manufacturing PMI for February came in below expectations and at levels indicative of contraction. This follows import and export data that was better than expected, but led some analysts to comment that it was possible Chinese companies were over invoicing in order to mask a slowdown. Today’s PMI reading could add credence to the risk of further slowdown in the Chinese economy.” So we continue to analyze all the data but remeber that the market always knows best.
Jim: So what do you see as the biggest opportunities moving forward?
Adam: The best and specific opportunities are provided to Midas Wave Alert Members in real-time. Generally speaking, the financials (XLF), biotechs (IBB), Healthcare (XLV), and tech stocks (QQQ) are all well positioned to capitalize on continued growth in the global economy and an aging population. Keep in mind that as all the baby boomers retire, they will need health care- whether we are in a booming economy or in a deep recession. So the health care space is poised to do very well down the road. Also keep look for innovation. I love finding companies that produce new products/services that revolutionize the way people live. Think about Apple Inc (AAPL) 10 years ago when they introduced the iTunes, iPhone, iPad, etc and completely changed the way people listen to music, used their cell phones, etc.. etc.. The stock soared as a result. Tesla (TSLA) is another great example. It is a little early but this stock has some real fire-power. It is up ~40% since it was featured in MWA just recently. They just reported earnings and smashed estimates, the stock surged another 10% this morning right at the open! That speaks volumes.
Jim: Okay, thanks very much Adam
Adam: My pleasure.
Note from Editor: Adam is the CNBC-quoted hedge fund manager and trading genius whose recommendations were actually UP 55% in 2008 and continues to provide great profits for subscribers to his Midas Wave Alert service available by invitation only.
<div>ALSO IN TODAY’S ISSUE:</div>- Bill Gates Just Put Nostradamus to Shame [Full Story]
- Articles of Impeachment Against Barack Obama [Full Story]
- A “Perfect” Energy Portfolio With One Fatal Flaw… [Full Story]
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<div>Blame China’s slowing growth. Blame the Fed. Blame the currency crisis in Argentina. It doesn’t matter.Investors are kicking off the New Year by panicking – sending stocks down for three consecutive weeks. A mere month into 2014, and the S&P 500 Index is already down almost 4%.
At this point, you might be considering joining in the stampede for the exits. But don’t even think about it!
Ever the contrarian, you know that I pay close attention to investor sentiment – and look to do the opposite.
If you think that’s a stupid mentality, take it up with Mr. Buffett. He’s the one who hardwired my brain to get greedy when others are fearful and fearful when others are greedy.
And as you’ll see in a moment, we could be on the cusp of an unmistakable call to action…
<div>There’s No Wisdom in Crowds</div>
The masses are “fair weather” investors, in the words of Bespoke Investment Group. “When the market rallies, they have been slow to embrace the advance. At even a hint of trouble, however, they rush for the exits.”And that’s exactly what’s happening right now…
For four straight weeks, the American Association of Individual Investors’ (AAII) bullish sentiment reading has been plummeting (faster than the temperature in most parts of the country).
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Last week, the AAII bullish sentiment reading fell to 32.18%. That’s nearly 23 points below the December peak of 55.06%.What’s more, for the first time since August 2013, bearish sentiment rose above bullish sentiment to 32.76%.
Clearly, attitudes towards stocks are changing for the worse. Ironically, that’s good news for us.
As I’ve shared before, whenever bullish sentiment drops below 25%, stocks (almost) always rally.
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Over the ensuing three months, they climb 6% higher on average. Then over the next six months, the gains reach almost 16% on average.I can’t think of a more obvious and reliable “Buy” signal over the last five years. If you can, let me know here.
For those of you who want to discount the data because it only takes into account the current bull market, chew on this:
Since 1987, when bullish sentiment dropped below 19%, which is equal to a full two standard deviations below the long-term average, stocks rallied over the next six months – 100% of the time.
In other words, the short-term and long-term data justifies our contrarian approach to investor sentiment readings.
<div>Turning Back Time on Valuations</div>
As it stands now, we’re a mere 7.18 points away from the critical 25% threshold being triggered.
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<td valign=”top” width=”476″>Work the Economy Like It’s Your Own Business…
<div>EverBank seamlessly combines our business banking knowledge with our 30-plus years of global market experience to create the new Business Foreign Exchange. See how a dedicated specialist can help you, right here…EverBank Disclaimer</div></td>
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Now, it’s not uncommon for sentiment readings to change by double digits in a single week. So come Thursday, when the next reading is released, we could get all the confirmation we need to start getting greedy. (Based on past examples, you could almost call it a mathematical certainty that stocks will blast higher if sentiment drops enough.)Plus, it’s important to keep in mind that stocks represent much more of a bargain than they did six weeks ago.
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After peaking near 17.5 times trailing earnings in December 2013, the S&P 500 Index is now trading for 16.5 times earnings. That’s almost 6% lower.What’s more, it’s uncommon for bull markets to end at such reasonable valuations.
Bottom line: Everyone likes to call himself or herself a contrarian. However, it’s statistically impossible for everyone to claim the title.
As early as this week, you could get an opportunity to prove your true colors. Don’t chicken out!
Ahead of the tape,
Louis Basenese</div><b>Today’s U.S. Blue Chip Stock Market Comments:</b>
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<b>Stocks fell hard again Friday, January 31<sup>st</sup>, ending a bad first month for 2014. The Industrials lost 878 points in January, about 5.3 percent. There was a great deal of power behind the decline, and it does not look over this weekend. All of our key Blue Chip indicators remain on a Sell signal this weekend. The NASDAQ 100 remains on a sideways signal. None of the internal measures look terribly oversold, no sign of selling capitulation, so that supports more downside over the short and intermediate term.</b>
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<b>This decline is coming on the heels of a December 2013 five observation Hindenburg Omen. All the major Bear Markets over the past 28 years have been accompanied by a Hindenburg Omen.</b>
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<b>The price action in January has largely been up and down, the oscillations violent, almost daily. In the charts on pages 34 and 35 we show that this is because both the Industrials and S&P 500 have had consecutive Declining Wedges, Sideways triangles, and are now poised for another Declining Wedge which should bring about a temporary reprieve, a countertrend bounce that lasts a few weeks. However, before that wave 2-up bounce, stocks look to need another decline, possibly into the coming February 7<sup>th</sup>phi mate turn date. We could see another couple hundred point drop in the Industrials before the pattern finishes, and wave 1-down of this new Bear Market in stocks completes.</b>
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<b>The NYSE Cumulative Advance/Decline Line Indicator has formed, and completed, an ominous Rising Bearish Wedge pattern, telling us the majority of stocks are starting downtrends that should last a long time. See the chart on page 27.</b>
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<b>Our Primary Trend Indicator as of January 31<sup>st</sup>, 2014 has not yet confirmed a new Primary Bear market. That is not unusual, as confirmation usually takes at least 6 months to occur. Bear Markets usually start several months before this lagging indicator confirms. However, once a Sell signal is generated, and a Bear Market confirmation arrives, we know from past history that most of the Bear market decline will lie ahead of us, and not behind us. The indicator is useful for long term investors, as they will then know for sure to get out of stocks before a lot more damage arrives.</b>
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<b>We believe that Grand Supercycle degree wave {III} up completed in the Industrials on December 31<sup>st</sup>, 2013, and that Grand Supercycle degree wave {IV} down has started. Could this January decline be a fake out? Possibly, but we believe this decline is different from those seen over the past year. There are too many coincident topping patterns completing in major stock markets globally at the same time, along with bottoming patterns in Treasuries and precious metals, along with the aforementioned topping pattern in the NYAD. This at the same time the Fed is tapering its monetization of debt. What a shame. The Fed pumps $4.0 trillion of new cash into Wall Street over the past several years only to see it go up in flames, disintegr ate during this coming Bear Market. Can you imagine if that $4.0 trillion went into infrastructure, new highways, bridges, rails? Can you imagine the jobs that would have been created, the benefit to society that would have resulted, the benefit to commerce? What foolish domestic economic policy that has been followed. Now we pay the piper.</b>
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<b>The powerful decline coming off of these topping patterns is something we would expect to see at the start of the next Great Bear market and Economic Recession/Depression. All the pieces of the puzzle fit.</b>
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<b>Looking at an important Wedge pattern, Gold’s wave 4-up was a Rising Bearish Wedge, a five wave rally that looks complete (see chart on page 49), and should now be followed by a strong wave 5 down, toward 1,100ish. If this is correct, Gold has topped and a decline that lasts for several weeks has started.</b>
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<b>Once the bottom arrives in Gold, a significant rally, large intermediate degree wave 5-up, will begin. Once Gold has bottomed, Gold should streak for $3,000 an ounce or more (over many years) because it will be entering its large degree wave 5-up. Wave fives are typically the largest wave for precious metals. What could kick off a powerful rally in precious metals? A sharp decline in stocks driving folks to the safehaven of Gold would do the trick.</b><b><i><span style=”font-family: ‘Times New Roman’;”> McH</span></i></b>
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<h1>Davos insiders?</h1>
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<div>Author:Adam Woods</div>
<div>Jan 31, 2014</div>
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Jim: Hello Adam, and thanks for joining us. Today I’d like to ask you about the recent turmoil in markets, what was behind it really?Adam There are a few factors that are occurring behind the scenes. First, emerging markets are trading over the map which is spooking developed markets. Second, and the more important reason, is that the Fed is scaling back on QE (printing less money each month to stimulate the market and the economy).
Jim: Markets moved lower BEFORE that Fed announcement though- what do you make of that?
Adam: Ahh, great question and that is what I love about you- you know how to read between the lines and see exactly what is going on.
One day after the world’s largest investors met in Davos, stock markets across the globe began to fall- very hard. In fact, the Dow Jones Industrial Average fell almost 700 points in a few days! Large institutions (after all meeting together in Davos, not a coincidence) aggressively dumped stocks a few days before the Fed said it will taper by another $10B/each month. It is very clear that someone (or some people) knew something.
The World Economic Forum held its annual meeting in Davos, Switzerland. According to its website, The World Economic Forum is members-only and not open to the public. Its Members comprise 1,000 of the world’s top governments, corporations, banks, and global enterprises usually with more than US$ 5 billion in turnover.
The WEF is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. The WEF was incorporated in 1971 and is headquartered in Geneva, Switzerland.
Again, these are the facts, I’ll allow your readers to draw their own conclusions. Stepping back, I’m still bullish on stocks and think this was just another head fake by the large institutions to influence prices (so they can buy at better prices).
Jim: Interesting! So, based on what you see now, do you see this as a countertrend correction in an ongoing uptrend, or something more ominous bearing in mind a lot of technical damage has been done now by this recent dip?
Adam: All my proprietary software and indicators tell me that this bull market is still alive and well and this is just another normal (and healthy) pullback within a broader uptrend.
It is very easy for people to get scared on Wall Street. And that is the exact reason why most people lose money, because they make emotional, not rational decisions. Lets put this pullback in the proper perspective. Stepping back, the S&P 500 soared 30% last year and is only down 3% since its record high set a few weeks ago. That is normal and healthy, remember markets take the stairs up and the elevator down.
Meaning they do not just go straight up. They tend to go up, consolidate for a while, then move higher, again and again. Interestingly, support (floor) for the S&P 500 is at 1767-1772 and resistance is at 1812 (ceiling) and then 1850. Yesterday’s low was 1770.45, which is not a coincidence. Until support is breached, the bulls deserve the benefit of the doubt.
Jim: And with the Fed’s punchbowl of printed money and bond purchases evidently slowly being withdrawn, will the bond and stock markets stand up on their own two feet now? Have the fundamentals really changed enough for that?
Adam: Not yet- remember the primary catalyst for this entire 4.75 yr bull market in stocks has been easy money from global central banks. As of right now, even with the last two taper announcements, the Fed is still printing $65B/month to stimulate Main St & Wall St.
Keep in mind, in September 2012, when QE 3 was first announced, the Fed said they will print $40B/month, then shortly thereafter they said they will print another $45B/month. This brought the total to $85/month which lasted for all of 2013. So right now at $65B/month that is still larger than when QE 3 was first announced.
Jim: OK so QE (money printing to buy your own debt) very much alive and well, and the bull market intact for now, albeit after a healthy correction?
Adam: Yes. Remember, other central banks are also printing tons of money to stimulate global markets, not just the US.
Jim: Adam, thanks very much.
Adam: As always, my pleasure.
<b>Note from Editor: </b>Adam is the CNBC-quoted hedge fund manager and trading genius whose recommendations were actually UP 55% in 2008 and continues to provide great profits for subscribers to his Midas Wave Alert service. Details here.
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Why does a Turkish rate rise equate to a spike in US indices? If it’s a sign of things to come I would have thought would have the opposite effect. Beats me.
The next market move
Author:Jim SamsonJan 27, 2014
samsonLast Friday’s action in the markets was awful, no doubt. It was the worst week since June last year.So what happens next? Did this mini-crash reveal any hidden opportunities?
Let’s take a look…
Only last week I showed you that a break below the 1800 area wouldn’t be so good, and the S+P did that in style on Friday:
127141Expect further downside to the 1770 area, perhaps after a small upwards bounce to the 1800 area. If the S+P can’t hold above 1770, the drop will likely continue to 1730. If it does hold above 1770, that’s a good sign.
So what does this mean in terms of what’s happening?
Well, I refer back to my 2014 prediction:
“What you see above is a market in a stubborn uptrend. A little overbought currently, and due for a correction, yes, but the uptrend is intact until proven otherwise.”
What you’re witnessing is that correction. Anything can happen, and I’m not saying Friday’s action was fun, but it was somewhat expected. To put things in perspective, let’s take a look at the longer term chart:
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That puts Friday’s drop into focus, doesn’t it? The S+P will have to do a lot worse than that before I change strategy- this is clearly a downward correction in a larger uptrend until proven otherwise (a ‘countertrend’). I’ve said it before, and I’ll say it again:
“The bull will do whatever he can to shake you off, and he often disguises himself as a bear.”
Dear reader, stocks don’t go up in straight lines. Now, a day like Friday can be useful though because it’s a chance to see what stocks were swimming naked when the tide goes out. In other words, it shakes out the weaker stocks from the stronger. Take a look at stocks that weren’t that badly affected on Friday. Or, even better, which stocks were UP like Microsoft.
For example, on September 2013 in this article, I said to take another bite out of Apple as it pulled back from its advance. The price then was $462, and the price now is $546. But on Friday it only gave up $10. And it didn’t break support, unlike the broader market.
So take a look around and perhaps use this as an opportunity to do some weeding in your portfolio. And let’s watch this bull closely as he plays his games with us…
Best,
Jim.
